On October 24, 2012, the Shanghai Futures Exchange released the revised standard copper cathode contract and its appendix to be implemented from November 26, 2012. A few days ago, head of the SHFE's relevant department accepted an interview with reporters and answered their questions about issues such as revisions to contract.

1. Why we revised the standard copper cathode contract and its appendix?

Answer：The SHFE's major consideration for revision to standard copper cathode contract and its appendix is to maintain its consistency with new national standard.

On October 1, 2011, new national standard on copper cathode (GB/T467-2010) released by the State Administration for Quality Supervision, Inspection and Quarantine and the Standardization Administration of the People's Republic of China, was officially implemented.

Compared with the original standard (GB/T467-1997), changes in new national standard on copper cathode are mainly shown in the following aspects: 1) Re-classification and re-designation has been made to product's nameplate. Names of high purity copper cathode and standard copper cathode in the original standard have been changed into the Grade-A copper and No.1 standard copper, but with their English names remaining unchanged; 2) Slight adjustment to chemical composition, in which, chemical composition of Grade-A copper remains unchanged while the bismuth (Bi) content as prescribed impurities of No. 1 standard copper has been adjusted from the previous 0.0006% to 0.0005% with a slight increase; 3) Uniform regulation has been set in respect of surface quality of copper cathode, in which, total percentage of green attachments on surface of copper cathode has been adjusted from the previous less than 3% of a single-sided area to 1%; 4) Addition of physical performance index, which can be negotiated by supplier and buyer; 5) Addition of sampling and sample-made method for copper cathode, as well as of analytical method for chemical composition.

Compared with the original standard, new national standard on copper cathode coincides with industry development trend, has more operability and reference value, and becomes more closely integrated with international standard in terms of product name and executive standard.

In order to realize the combination of copper futures and physical market , give further play to function of copper futures products and prevent market risks, and improve the overall quality of products delivered against standard copper cathode contract, SHFE considered it an necessity to make corresponding adjustment and optimization to existing standard copper cathode contract and its appendix.

2. What are the main focuses of this revision to copper futures contract?

Answer: In accordance with relevant regulations as prescribed in the Administrative Regulations on Futures Trading, the Administrative Measures on Futures Exchange and the Bylaws of the Shanghai Futures Exchange, the Exchange has the duty to revise and improve the trading rules and contracts for copper futures, which will be implemented after approved by China Securities Regulatory Commission.

This revision to copper cathode mainly involves:

1) Quality standard on "standard copper cathode", the standard deliverable-grade product as prescribed in Standard Copper Cathode Contract of Shanghai Futures Exchange, has been revised to: No.1 standard copper(Cu-CATH-2) that complies with relevant regulations on 1 standard copper(Cu-CATH-2) in GB/T467-2010 with a Cu+Ag content of not less than99.95%; quality of substitute for "high purity copper cathode" has been revised to: grade-A copper(Cu-CATH-1) that complies with relevant regulations on grade-A copper(Cu-CATH-1) in both GB/T467-2010 and BS EN 1978:1998.

2) Revision to the contract's Appendix: in which, title of "standard copper cathode" and "high purity copper cathode" has been revised to No.1 standard copper(Cu-CATH-2) and grade-A copper(Cu-CATH-1) respectively.

3. Is there any attentions the investors in copper futures market need to pay to after revision to this contract? 　　

Answer: New national standard is a further perfection of the old one. This revision, in doing so, was broadly participated and recognized by major enterprises in this industry. Therefore, it will not cause more market volatility due to the shift in standards

The investors need to be reminded: the originally-generated standard warrant can continue to be used for performance delivery; since issuance of this text, it is allowable to generate standard warrant for performance delivery based on copper cathode produced in accordance with new national standard.

4. Currently how relevant enterprises taking part in copper futures market reacted to this revision to the contract?

Answers: On September 2011, the Exchange started to carry out new national standard on copper cathode, conduct questionnaire to all registered copper cathode enterprises in the country, and to help and urge the registered enterprises to timely carry out the shift towards new national standard. According to current survey, the registered enterprises of each brand has been able to conduct well in all works regarding such shift based on the requirements in new national standard.

During survey and investigation, the Exchange broadly collected opinions from copper-consuming enterprises, trade enterprises, designated warehouses for delivery and relevant futures firms, as well as listened to the suggestions by each party involved in the market on copper cathode futures market development. Put these opinions together, it was widely accepted that new copper cathode standard is more attuned to industry development trend and more closely integrated with international standard in terms of product name and executive standard. The Exchange should make corresponding adjustment and optimization to existing standard copper cathode contract and its appendix as soon as possible, and carry it out as well.

After carrying out the revised standard copper cathode contract and its appendix, the standard on products delivered against copper cathode contract and its degree of standardization will be further improved , which in turn will give more impetus to market function and risk management